Interpreting semilogarithmic regression coefficients in labor research

Labor economists frequently misinterpret coefficients of variables in semilogarithmic regression equations. The proportional rates of change in the dependent variable that are implied by these coefficients are often erroneously assumed to be valid over arbitrarily large intervals. This note provides mathematical and empirical evidence on how serious the error can be. A simple formula is developed for making correct interpretations of semilog regression coefficients. The authors thank David Greenaway for helpful comments.